Across Europe, raising pension ages is a necessary – yet incendiary – conversation. As life expectancies increase, so does the ratio of pensioners to workers, ultimately resulting in mounting pressure on state budgets.

In countries where retirement reforms have sparked controversy, one argument continues to resurface. Raising the state pension age, many argue, can’t be a ‘one-size fits-all’ approach. Due to disparities in wealth, health, and professional tasks, mandating longer working lives affects some employees more than others. Specifically, those who earn less, are in poor health, or have demanding jobs may suffer more from the hikes – in cases where exemptions don’t apply.

When trying to fill the productivity gap, governments must therefore consider the profiles of workers. Understanding the disparate reasons for late and early retirement can be key to raising output – as well as boosting equality and employee wellbeing.

Health factors

For those who are forced to leave the workforce before retirement age, one key determinant is health. If you are not physically able to continue working, most countries will allow you to draw your pension early. This means that investing in healthcare is an important tool for governments to keep employees working for longer.

Even so, health barriers are also linked to the nature of one’s profession. “In general, white collar occupations tend to have higher participation rates into old age than people in blue collar occupations,” said Arthur Seibold, assistant professor of economics at the University of Mannheim. He noted that this is due to the “physically demanding” nature of the work, although the same can sometimes be seen of mentally challenging professions.

EU countries including France, Italy and Spain provide extra pension provisions for a large number of jobs considered hazardous or arduous. For instance, in France, if you work at night or under extreme temperatures, you may be able to draw your pension early.

It’s also significant to note that while a long working life can have negative health effects in certain professions, some studies show that postponing retirement reduces an individual’s risk of cognitive decline.

Financial pulls and other incentives

In European countries, employees can generally afford to stop working at the statutory retirement age thanks to public pensions. Even so, wealthy individuals have the added freedom of early retirement.

Barret Kupelian, chief economist at PwC, spoke to Euronews about the Golden Age Index, a ranking of OECD countries based on the employment of older workers. “We find that when house prices in the UK grow substantially, this tends to pull older workers out of the workforce,” he explained. “This means that would-be pensioners feel comfortable about housing doing the savings for them, and they can retire earlier than they were planning to.”

Even when workers can afford to retire, however, this doesn’t mean that financial motivations can’t encourage them to stay in employment. Many countries allow workers to keep accruing pension supplements past the statutory retirement age, and they may choose to offer tax bonuses to older workers. In Belgium, for instance, the ‘flexi-job’ system allows individuals who have already taken retirement to return to work and receive their salary tax-free.

Other measures that can encourage workers to delay retirement include flexible working conditions and a positive working environment.

“Older workers want flexibility, both in terms of working location and hours, because some of them have caring responsibilities, particularly for their parents who are older,” said Barret Kupelian.

Professional satisfaction

Euronews spoke to Edward – who preferred not to give his real name – who recently retired from his role as a chartered accountant at the age of 72.

“I lived in south-west London and was walking down the local high street when I bumped into an old acquaintance who asked what I was doing,” he explained.

“When I told him I’d retired, he told me I was too young to do that and I was just who he needed. He insisted I ‘pop’ into his office – round the corner from where we met and I followed him and started work a week later. My specialism was slightly unusual but he knew it and it fitted with his business.”

“I ended up staying for more than five years over retirement age and I thoroughly enjoyed it. I worked with a young team. They were very welcoming and I felt I almost gained a new lease of life. It’s always interesting to learn about different generations.”

Janie, again not her real name, spoke to Euronews about her decision to change career and continue working past retirement age.

Having started her early working life in finance, she now works in the luxury end of the sales market.

“I’m self employed and it suited me to keep working. I find what I do very rewarding, both financially and for my own satisfaction. I enjoy the excitement of persuading someone to buy what I’m selling and that doesn’t diminish with age. Sometimes I think I’m going to give it up and retire but then I wonder what I’d do instead.”

Removing barriers for older employees

Janie explained that ageism had never prevented her from doing her job. Even so, she added: “I may sometimes feel as though I’m being ‘dismissed’ because of my age.”

Jelle Lössbroek, a postdoctoral researcher at the Netherlands Interdisciplinary Demographic Institute, told Euronews that for most older workers, “keeping your job is generally not a barrier”.

“Older workers generally have good employment protection so it is hard to fire them in most countries. In fact, their employment protection is often better than for younger workers.”

Despite this, it may be more difficult for older workers to be rehired, notably because they tend to be more expensive than younger employees.

In the Netherlands, Lössbroek also added that a specific labour law can make it harder to work past retirement age. “Here in the Netherlands, employers can fire their employees at reaching the retirement age,” he explained. If the staff member is kept on after this time, the employer needs another reason to fire them. This means that many employees are keen to give out temporary rather than permanent contracts to older employees.

Another barrier for workers close to retirement age is technological change, as younger staff tend to be more digitally savvy. Governments and companies may offer courses to reduce this skills gap, although some older workers could feel less incentivised to become digitally trained.

Whichever way policymakers seek to combat the issue, debates around retirement will simply grow more significant in the coming decades.

“In a lot of European countries, we’re already seeing labour shortages in many occupations and so there will be a high value for firms to keep older workers,” said Professor Seibold from the University of Mannheim.

The question for states is how to do this in a fair and effective way, often in the face of political backlash.